Stocks on Bursa Malaysia closed lower yesterday with the benchmark FBM KLCI falling 10.06 points or 0.59% to end the day at the lowest point of 1,699.70. The index fell in the afternoon after Prime Minister Najib Abdul Razak announced a cabinet reshuffle, in which he removed Muhyiddin Yassin as the deputy prime minister and replaced him with Ahmad Zahid Hamidi. Losers thumped gainers by 726 to 197 with 251 counters unchanged. Total volume fell to 2.14 billion units valued at RM2.25 billion from 2.22 billion units valued at RM1.8 billion.
Following the fifth consecutive day of losses on Wall Street overnight, the FBM KLCI opened 1.14 points lower at 1,708.62 and slipped lower to hit the morning session low of 1,701.15 an hour later. The key index rebounded from the low and rallied to the intra-day high of 1,713.06 just before noon, and in the afternoon, it plunged on news of the cabinet reshuffling to close the day at the lowest point. Chart-wise, the FBM KLCI formed a bearish black candlestick which indicates the bears or sellers were in control for the day, and hence the key index is likely to slip lower today on continued selling pressure. Immediate downside support zone is at 1,695 to 1,685, while the overhead resistance zone is at 1,707 to 1,713.
MACD slipped lower and is staying just above the signal-line, and its histogram also contracted downward strongly, indicating a big increased in the bearish momentum. RSI (14) fell to 37.9 from 41.9, indicating the FBM KLCI has turned bearish from a mildly bearish state. Stochastic was lower at 48.9 from 63, and has closed below the 50-point level, indicating the short term outlook of the key index is bearish. Readings from the indicators showed that the FBM KLCI is turning bearish and is likely to further correct downward.
The bigger technical picture of the FBM KLCI still remained very much unchanged in that the medium and long term trend is down, while the short term trend is sideways range-bound with a downward bias, and the near term trend is down. With the bearish move yesterday, the FBM KLCI has closed below the psychological support of 1,700-point, and hence is likely to trigger more technical sell as the bear camp took control. The next lower critical support zone lies at 1,688 to 1,685, and a break of this immediate support zone will see the FBM KLCI plunging lower to test the 1,671-point pivot low support, which is also the neckline for the Head-and-Shoulder pattern, a classical top reversal chart pattern, in which a break of the neckline may have a potential downside target of 1,448.
Overnight, the Dow rose 189.68 points or 1.09% to close at 17,630.27. Today, the FBMKLCI is likely to trade within a range of 1,681 to 1,726.
This week's expected range: 1686 – 1759
Today’s expected range: 1681 – 1726
Resistance: 1708, 1717, 1726
Support: 1681, 1690, 1695
Stocks to watch: BTM, CMSB, FBMKLCI-HG, FBMKLCI-HH, FBMKLCI-HL, FBMKLCI-HM, FBMKLCI-HT, FBMKLCI-HW, GLOMAC, IDMENSN, IREKA, KRETAM, MITRA, OMEDIA, TEKALA, WELLCAL, XDL
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